Interest rate cannot be reduced in the near future as price-fueled inflation still stays intractably high, Bangladesh Bank Governor Dr Ahsan H Mansur said Monday to set at rest businesses' pleas.
Speaking at same function, Meanwhile, National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan also sounded alarm that Bangladesh has already got into "debt trap", a "truth" which should be acknowledged.
On the conundrum of high interest and high inflation Ahsan H Mansur said, "Besides, the deposit rate is still high at nearly 10 per cent. This trend may not change within a year or in one and a half years. So, the reduction in policy rate at this moment may not be possible.
"If we do not acknowledge the problem, we would not be able to recover from the troubles."
Remarks from both the key persons in the overall economic spectrum were made at the function on the launch of the 'Bangladesh State of the Economy 2025 and SDG Progress Report 2025". The General Economics Division (GED) of the Planning Commission prepared both the reports. The function was chaired by GED Member Dr Manzur Ahmed.
The governor's opinion came after comments by some economists over the surge in debt servicing, weakening revenue growth and rising fiscal stress.
About the non-performing loan (NPL) buildups, the central bank governor at the function said there would be some positive outcomes within this month of December.
"The NPL has increased to some 35 per cent of the total outstanding loans in our count from 25 per cent in previous calculations. Actually we have not manipulated the data. We have made transparency in issuing all the data. We hope there will be significant improvements regarding the NPL within a shorter period," he added.
If any loan is issued by banks and that become non-performing one, then the responsible bankers would be held accountable, Dr Mansur told the meet.
"We are trying to establish good governance and accountability at the banks and financial institutions as 50 per cent of the board directors would be appointed from the open market instead of the previous trend of family property."
About the much-talked-about consolidation of five troubled banks, the governor said deposit- insurance coverage has been raised from Tk 100,000 to Tk 200,000, and refunds may begin within a week or two.
The new bank born lout of mergers of the five could return to profit within two years, he hopes, noting that about 7.6 million families will benefit from the deposit protection.
"Under the bank resolution law, 5 banks have already merged and 9 NBFIs are in the pipeline. We are making progress gradually. It will take 4-5 years to get a comprehensive result of our current actions," the governor explains the regulatory move on banking-sector reforms.
"In the name of bank ownership, many assets have been laundered overseas which we are trying to recover," he told the audience.
Dr Mansur mentions that they have engaged certain banks to recover their stolen assets from home and abroad to sustain their business.
Meanwhile, the NBR Chairman said, "We have taken huge loans and foreign loans over the last few years the repayment pressure of which is now falling on fiscal balance."
Interest payments, he notes, have climbed so sharply that they now surpass allocations for agriculture and education.
The NBR chairman also highlights the steep fall in the tax-to-GDP ratio-from more than 10 per cent a few years back to roughly 7.0 per cent in recent days.
Mr Rahman says the government must identify why revenue mobilisation has become so challenging across key sectors.
He mentions that the revenue board will soon undergo major restructuring, to be split into two wings under separate secretaries during the interim government's tenure.
Distinguished Fellow of CPD Prof Mustafizur Rahman cautions that Bangladesh risks borrowing simply to repay old debts unless it restores fiscal discipline and improves tax collection.
Chief Adviser's Special Assistant for the Ministry of Finance Dr Anisuzzaman Chowdhury was present at the function as chief guest, while BB Governor Ahsan H Mansur special guest. Senior officials, academics and economists also joined.
Dr Anisuzzaman notes that the stabilising exchange rate, easing inflation and stronger remittance channels have helped restore confidence in the economy.
"Bangladesh has absorbed several shocks without slipping into negative growth, but sustained, coordinated reforms are essential ahead of the country's LDC graduation."
Former World Bank lead economist Dr Zahid Hussain finds the economy clearly under strain but has avoided a deeper breakdown due to social resilience, calmer political conditions and early reform efforts.
He warns: "This stability may not hold without uninterrupted elections and steady policy action."
Former Economics Professor of Dhaka University Mahbubullah notes that Bangladesh's economic vulnerabilities stem from a deeper structural imbalance. He argues "decades of extraction, rent-seeking and uneven wealth redistribution have suffocated productive investment".
Inflation, a stagnant investment climate and an overreliance on a narrow export base will persist, he predicts, unless the country shifts from an accumulation-driven system to one centred on production.
Shafiqul Alam, Chief Adviser's Press Secretary, criticizes sections of the business community for sending "mixed signals" and refusing to back key reforms, particularly port modernisation.
"Despite being the main beneficiaries," he says, "garment exporters have not publicly supported the initiatives."
He accuses some business leaders of promoting misleading narratives about the economy while ignoring the progress achieved over the past year.
"Selectively presenting poverty data and economic indicators," he says, "has distorted public perception and weakened evidence-based debate."
Shafiqul adds that misrepresentation of issues like gas shortages and port delays has overshadowed the administration's achievements. Job creation remains government's top priority, and international investors view efficient ports as fundamental to Bangladesh's competitiveness.
Despite resistance from certain quarters, he describes the recent economic turnaround under Chief Adviser Prof Muhammad Yunus as "historic". The current macroeconomic-management team "may be the strongest since the reform periods of the late 1970s and early 1990s".
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